How to Use Your Annual TFSA Room to Double Your Contributions

The Canada Revenue Agency (CRA) has set the annual contribution limit for the Tax-Free Savings Account (TFSA) at $7,000 for 2026. But you need not limit your contributions to just $7,000. The CRA’s contribution limit is the amount you can put in the TFSA from your working income. However, what you do inside the TFSA is purely a matter of your investment skill.

How to double your TFSA contributions

Let’s say you invest $7,000 in a stock that grows your money 20–30% to $8,400 or $9,400. This is not a hypothetical figure, but popular stocks like Bombardier, Enbridge, and Power Corporation of Canada have achieved these returns in the first half of 2026.

A 30% return in six months from Bombardier is lucrative and worth cashing out. You could consider selling shares worth $2,400, while keeping the $7,000 invested in Bombardier. This profit can be invested in other seasonal stocks, like Shopify (TSX:SHOP).

By doing this, you have increased your investment to $9,400 in 2026, without breaching the contribution limit. A word of caution. Frequent buying and selling of the same stock within a TFSA could attract the CRA’s attention if they feel it constitutes trading. Thus, avoid frequently rebalancing.

Another way to grow your TFSA contributions is by reinvesting dividends. Suppose you had bought 100 shares of Power Corporation of Canada a few years back. These shares will pay $267 in 2026 at a dividend per share of $2.67. You can reinvest this money to buy growth or dividend stocks.

This rebalancing and reinvesting help compound your returns. In a few years, compounding returns will match your TFSA contributions from working income. This dividend reinvestment may not attract CRA interest, as you are only buying shares. In trading, you both buy and sell shares.

A TFSA stock to buy if interest rates remain unchanged

Oil prices have dropped to pre-war levels as the market adjusts to the US-Iran war situation. In the first quarter, the RBC Consumer Spending tracker noted that Canadian household spending grew steadily despite high energy costs from the war. The cooling of oil prices could boost consumer spending.

Shopify would be a key beneficiary of increasing consumer spending. Now is a good time to invest in the stock, as a strong holiday season sale could push the stock up as much as 50%. This estimate is based on the stock’s past seasonal rally of 70% between August 2023 and February 2024 and 141% growth during the same period in 2024–2025.  

These were the years when the Bank of Canada paused interest rate hikes and began rate cuts in 2024. These were also the years when oil prices corrected after the Russia-Ukraine war, and Air Canada stock touched a $25 share price in peak seasons. The sharp correction in oil prices to US$69/barrel eases concerns of an interest rate hike. All these macro signals point to a strong holiday shopping season.

A TFSA stock to buy if the US-Iran war continues

The US and Iran are on a ceasefire at the time of writing. If the war escalates, Canadian energy stocks could once again see a rally. Canadian Natural Resources (TSX:CNQ) is a stock to buy in small amounts throughout the correction. Owning Canada’s largest oil sands reserves, it has a cost advantage and can sustain a US$50/barrel oil price. Considering the cyclical nature of oil prices, $45–$50 is the ideal entry point for CNQ stock as you can lock in a 5% yield.

If there is another energy shock, it will be a key beneficiary because of its low cost and slowly depleting oil sands reserves. During weak periods, the stock can pay dividends that you can reinvest in growth stocks. During a cyclical rally, you can book a profit and rebalance your portfolio. Moreover, you can enjoy annual dividend growth between 6% and 18%.

Final thoughts

Shopify and CNQ are perfect TFSA stock picks for rebalancing and reinvesting, thereby compounding returns.